When and where (mostly where) to invest??

Question

I find my self constantly on the internet looking for the next "boom city" or a city that is in recovery on the rise or a city in a seller's market. I live, born and raised; in a small town of 10,000 people in Kansas. To keep things short this is not where I want to begin my real estate journey. Maybe it's because I know everybody and everybody knows me, or because there seems to be a tight leash on things around here. Probably not the best reasons but regardless I want a fresh start. That's alllll I freakin want is a fresh start! Please excuse my emotion but I'm tired of constantly thinking about real estate, reading about real estate, and when and where and how I'm going to get started. I know the time is now, but the problem is I knew it was now 6 months ago. I guess I'm here to ask if it were you. Your 23 on your own, you've got little (couple thousand) to no money, no credit, no experience, just time and opportunity. Where do you start?

Brian Wilson · Answer

@Dalton Dyer

It's very difficult when you're young to be patient. If I were you, I'd get my RE license and do that as a side hustle. Good way to learn about real estate and get some aspect of the industry under your belt. Plus it really helps with your lack of capital problem. Money really matters in the buy and hold game. It allows you to weather storms and bad times so that you can enjoy the other +20 years of good returns.

I'd also look into house hacking after you get some more capital. House hack a nice 2-4 unit property and then move after your year is up then rinse and repeat. In 10 years you could be looking at anywhere from 50k-+100k in cash flow depending on how you buy and market conditions. Best part is you'll only be 33 (still young as can be).

Just food for thought man.

Bjorn Ahlblad · Answer

Nothing wrong with small towns! I only invest in opportunities I can drive to in an easy hour (no heavy traffic). I can physically respond to whatever is going on if needed. I work with and get to know local bankers, insurance agents, etc and they might even give me leads-it has happened! Your biggest asset right now is local knowledge; maybe time to lead with that card.

Steve Vaughan · Answer

I have quite a bit in a small town, so I get your hesitation.  But the nice thing about that is, if you are a straight shooter and treat your sellers right,  others will come to you when they are ready to sell. I became the largest unit owner in a town of about 1200 that way.

It's a nice advantage this being THE rental buyer but absolutely imperative that you act above board at all times in a small town. Tie goes to the tenant. Mercy goes along way. Others will realize that tenant you evicted or had problems with was a turd..... eventually..... but it was still Suzy's niece...

Rico Johnson · Answer

Dalton

It seems that your city may not be a bad place to start. If you choose a strategy and execute correctly you can become the authority in your market.  For instance, if you learned the ins and outs of short sales, structuring owner financed deals, or lease options you could easily become "that guy". You could perfect your craft at home and take the show on the road in the future. It always helps to be familiar with the market that you are investing in.

Grant Rothenburger · Answer

@Dalton Dyer Find yourself a deal via driving for dollars, craigslist, other sites/social media. Talk seller into owner financing. Easier said than done, but can be done and is a good place to start.

Terry Lao · Answer

@Dalton Dyer

A lot of information and comments to digest. Everyone starts somewhere. Most start where you are now. The big advantage you have over most everyone who commented or posted is you starting at young age of 23. Learn from comments and suggestions to your question. Learn from others mistakes as this cost nothing. However, it is when you lose the most, you learn the most.

As the list I gave you is free, and it is a starting point. Note that when list came out in December 2017. Everyone before you got the jump, and you are now only reading. The key is to be a step ahead of everyone else.

Terry

James Wise · Answer

Dalton,

To be blunt you have literally nothing going for you as a potential real estate investor.

HOWEVER

all is not lost. What you see as a negative (Being from a small town where everyone knows you) is actually a major positive when starting a career in Real Estate Sales, which is where you need to start. You can't invest if you have nothing to invest. What you can do is work in the field saving up your money until you are ready to invest. So if I were you i'd get my self into real estate licensing school & begin there. Knowing everyone can be a huge competitive advantage for you.

Eric Scheele · Answer

@Dalton Dyer given your variables (specifically the low to no capital),  I would suggest you stay focused on Atchison / Leavenworth markets.  Maybe the Kansas City market, but I think your price per pound will go much further in both your local markets and are good rental markets overall.   We start many beginning buy and hold low cap investors with 2 to 4-plex units in Leavenworth.  Atchison tends to be a bit further out geographically for our appetite, but we monitor it from a higher level for low cap investment indicators in case needed.   I think Atchison is a good market for you to start your search.  You know the area, the price per pound is there and you will not need to travel to monitor your investment progress.  Get to know your local market.  There are times when we don't mind working with new remote investors, but they would be in a much different financial stratosphere than where you are today.  They can afford the loss if it happens - not to say it would - but just in case.  It is an investment after all - good and bad.  And if bad is going to happen, it will most likely happen at the beginning.   Limit your exposures and variables by staying local.

To address your cap limitations, there are lenders that will have specific low down buy and live in programs with competitive interest rates that allow you as an owner occupant to finance a 4-plex as long as your live on site for a full year.  Talk to lenders, ask questions and learn.  Many lenders will vary their programs to create niches for customers and remain competitive.  Ask around and see what your can find.

Good luck in the search.

Dalton Dyer · Answer

Wow definitely food for thought from everyones insightful inputs. Thomas my income has been inconsistent of here lately due to factors outside of work no excuses though. I have been working for the past few months and will continue to work as I understand my paycheck is the only source of income and only asset I have going for me. I just left my county assessors office today and she will be sending me every 2-4 unit property in my county today. I will continue to work, continue to save money, and continue to think and act as an investor. Even though I don't have much capital at the moment. I figured I can still learn alot from the process as if I did. So when the time comes I will be steps ahead of the game.

Thomas Lee · Answer

@Dalton Dyer I second the house hacking suggestion. Identify one of those up and coming "boom cities" and find a job there. If you can get started with FHA financing and rinse and repeat, you'll have a sizable portfolio in just a few years. You don't even have to find "deals" – as an FHA buyer you will probably have to offer more than a traditional cash or conventional financing buyer, but with 3.5% down your returns will be worth it.

What is your job/career? Without a stable income, finding financing will be impossible and you'll never get started. My greatest asset when it comes to getting started in real estate investing is my paycheck. You'll need some income and credit history as well to get started...start building that now...you have an ocean of time in front of you.

Not sure how valuable finding a "partner" will be when you don't have any experience or capital.

When and where (mostly where) to invest??

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